August 2004 Producer Price Index

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The Producer Price Index for Finished Goods declined 0.1 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This decrease followed a 0.1-percent advance in July and a 0.3-percent decline in June. At the earlier stages of processing, prices received by manufacturers of intermediate goods jumped 1.0 percent in August, after a 0.8-percent gain in the preceding month, while the crude goods index fell 0.7 percent, compared with a 0.2- percent decrease in July. (See table A.)

Among finished goods, prices for both finished goods other than foods and energy and finished consumer foods edged down in August -- falling 0.1 and 0.2 percent, respectively. By contrast, the finished energy goods index moved up 0.2 percent in August.

Before seasonal adjustment, the Producer Price Index for Finished Goods decreased 0.1 percent in August to 148.6 (1982=100). From August 2003 to August 2004, the finished goods index rose 3.4 percent. Over the same period, prices for finished energy goods climbed 9.9 percent, the index for finished consumer foods increased 4.0 percent, and prices for finished goods other than foods and energy advanced 1.5 percent. At the earlier stages of processing, the index for intermediate goods moved up 8.1 percent, and prices for crude goods rose 22.4 percent for the 12-month period ended August 2004.

Finished goods

The index for finished consumer goods other than foods and energy decreased 0.2 percent in August, after inching up 0.1 percent in July. The light motor trucks index fell 2.5 percent, after showing no change in July, while passenger car prices declined 1.2 percent in August, compared with a 0.4-percent decrease a month earlier. The indexes for cosmetics and other toilet preparations, sanitary papers and health products, and household appliances fell, following increases in July. Prices for book publishing, periodical circulation, and men's and boys' apparel were unchanged in August, after rising in the preceding month. By contrast, the alcoholic beverages index jumped 1.3 percent, compared with a 0.1-percent increase in July. Prices for pharmaceutical preparations also rose at a quicker pace in August than they did in July. The indexes for women's, girls', and infants' apparel and for household furniture turned up, after falling in July.

The finished consumer foods index fell 0.2 percent in August, after a 1.6-percent drop in July. The rate of decline in prices for beef and veal slowed to 3.2 percent in August from 8.3 percent in the previous month. The dairy products index also fell less in August than it did in July. Prices for fresh and dry vegetables, soft drinks, and shortening and cooking oils moved up in August, after falling a month earlier. The pork index increased at a faster rate than it did in the preceding month. Conversely, processed young chicken prices dropped 7.1 percent in August, compared with a 1.1-percent decrease in July. The index for eggs for fresh use and the index for fresh fruits and melons also went down more than they did in the preceding month, while price increases for finfish and shellfish slowed in August.

Capital equipment prices inched down 0.1 percent in August, compared with a 0.1-percent rise in July. The light motor trucks index fell 2.5 percent in August, after showing no change in the previous month. The indexes for passenger cars, electronic computers, and x-ray and electromedical equipment decreased at a faster rate than they did a month earlier. Prices for semiconductor manufacturing equipment turned down in August. On the other hand, prices for communication and related equipment increased 0.2 percent in August, following a 0.7-percent decline in the preceding month. The indexes for commercial furniture, heavy motor trucks, and integrating and measuring instruments also turned up, after falling in July.

The finished energy goods index advanced 0.2 percent in August, following a 2.3-percent gain in the prior month. In August, rising prices for liquefied petroleum gas, residential natural gas, home heating oil, residential electric power, and diesel fuel slightly outweighed falling prices for gasoline and finished lubricants.

Intermediate goods

The Producer Price Index for Intermediate Materials, Supplies, and Components rose 1.0 percent in August, after posting a 0.8-percent gain in the previous month. Prices for materials and components for construction, materials for nondurable manufacturing, intermediate energy goods, and materials for durable manufacturing also rose at a faster rate than they did in July. On the other hand, the intermediate foods and feeds index fell more in August than it did a month earlier. Prices for intermediate goods other than foods and energy advanced 1.0 percent, following a 0.5- percent increase in the prior month. (See table B.)

Subsequent to a 0.2-percent increase in July, the index for materials and components for construction moved up 1.4 percent in August. Plywood prices turned up 13.7 percent in August, after falling 11.1 percent in the preceding month, and the softwood lumber index increased 8.1 percent, compared with a 1.9-percent decrease in July. The indexes for building paper and board, treated wood, and air conditioning and refrigeration equipment also rose, following declines in July. Prices for fabricated structural metal products, concrete products, and plastic construction products increased more than they did in the previous month. By contrast, the mineral wool for structural insulation index edged down 0.1 percent in August, compared with a 5.6-percent rise a month earlier. Prices for plumbing fixtures and brass fittings also turned down, while the indexes for fabricated ferrous wire products and switchgear rose less than they did in July. Prices for asphalt felts and coatings showed no change in August, after posting an increase in the prior month.

The rate of increase in the index for materials for nondurable manufacturing rose from 1.0 percent in July to 1.7 percent in August. Accounting for much of this acceleration, the industrial chemicals index jumped 5.7 percent, following a 1.6-percent gain in July. Prices for fertilizer materials and paint materials also increased more than they did in the preceding month, while paper prices turned up in August. Alternatively, the paperboard index fell 0.4 percent in August, after climbing 5.5 percent in the previous month. Prices for inedible fats and oils, processed yarns and threads, and synthetic fibers also turned down, following increases in the prior month. The medicinal and botanical chemicals index declined at a quicker rate in August than it did a month earlier, while prices for plastic resins and materials rose less than they did in July.

The intermediate energy goods index went up 2.7 percent in August, following a 2.3-percent gain in the prior month. Industrial electric power prices turned up 3.0 percent, after falling 1.2 percent in the preceding month. The indexes for commercial electric power and residual fuel also advanced, following decreases in July. Prices for industrial natural gas, liquefied petroleum gas, and commercial natural gas rose more quickly in August than they did in the previous month. On the other hand, the gasoline index dropped 5.0 percent in August, after moving up 5.4 percent in the preceding month. The indexes for natural gas to electric utilities, jet fuels, and diesel fuel increased at a slower rate than they did in July.

A 10.3-percent increase in the index for hot rolled steel bars, plates, and structural shapes was the most important factor behind a 1.1- percent gain in the index for materials for durable manufacturing in August. Price increases were also registered for plywood, cold rolled steel sheet and strip, building paper and board, cold finished steel bars, cement, and aluminum mill shapes. By contrast, the indexes for primary nonferrous metals, unprocessed filament yarns, and copper and brass mill shapes declined in August.

The intermediate foods and feeds index moved down 5.2 percent in August, compared with a 1.4-percent decline in the preceding month. Prices for prepared animal feeds plunged 10.1 percent, after rising 2.3 percent in July. Confectionery material prices also turned down in August, while the indexes for processed young chickens; flour; and dry, condensed, and evaporated milk products fell more than they did in the prior month. On the other hand, the beef and veal index went down 3.2 percent in August, following an 8.3-percent drop in the previous month. Prices for fluid milk products also decreased less than they did in July. The indexes for natural, processed, and imitation cheese and for shortening and cooking oils turned up, following declines a month earlier, and the index for pork rose more than it did in July.

Crude goods

The Producer Price Index for Crude Materials for Further Processing fell 0.7 percent in August, after edging down 0.2 percent in July. In August, declining prices for crude foodstuffs and feedstuffs and for crude energy materials outweighed rising prices for crude goods other than foods and energy. (See table B.)

The crude foodstuffs and feedstuffs index decreased 4.6 percent in August, following a 4.8-percent decline in July. Falling prices for soybeans, fluid milk, corn, slaughter broilers and fryers, wheat, and fresh fruits and melons outweighed price increases for fresh and dry vegetables, slaughter cattle, slaughter hogs, unprocessed finfish, and slaughter turkeys.

The August index for crude energy materials inched down 0.1 percent, following a 0.2-percent gain a month earlier. Natural gas prices dropped 6.7 percent, after slipping 2.0 percent in the preceding month. Conversely, the crude petroleum index advanced 12.5 percent, compared with a 5.3-percent increase in July. Coal prices turned up 0.1 percent, following a 0.9-percent drop in the prior month.

Price increases for basic industrial materials slowed from July to August -- rising 8.6 and 4.5 percent, respectively. The iron and steel scrap index increased 7.7 percent in August, following a 32.2-percent surge in July. The indexes for construction sand, gravel, and crushed stone; aluminum base scrap; copper base scrap; and hides and skins also rose less rapidly in August. Prices for gold ores turned down, after moving up in the previous month. By contrast, falling prices for raw cotton slowed in August, declining 3.0 percent after sliding 15.5 percent a month earlier. The indexes for phosphates, iron ore, and for hardwood logs, bolts, and timber turned up, following declines in the prior month. Wastepaper prices rose more quickly in August than they did in July.

Net output price indexes for mining, manufacturing, and services industries

Mining. The Producer Price Index for the Net Output of Total Mining Industries advanced 1.3 percent in August, after rising 0.9 percent in July. (Net output price indexes are not seasonally adjusted.) Much of this acceleration can be attributed to prices received by the natural gas liquid extraction industry, which turned up 2.2 percent following a 0.3- percent decrease in July. The industry indexes for bituminous coal and lignite surface mining; potash, soda, and borate mineral mining; and iron ore mining also turned up in August. Prices received by the oil and gas well drilling industry rose more in August than they did in the prior month, while the bituminous coal and lignite underground mining industry index increased, after showing no change in July. By contrast, the crude petroleum and natural gas extraction industry index increased 0.3 percent, after rising 1.5 percent in July. Prices for oil and gas operations support activities also advanced less than they did in the previous month, while the industry indexes for gold ore mining and support activities for coal mining fell, following increases in July. In August 2004, the Producer Price Index for the Net Output of Total Mining Industries was 157.2 (December 1984=100), 25.3 percent above its year-ago level.

Manufacturing. The Producer Price Index for the Net Output of Total Manufacturing Industries rose 0.2 percent in August, compared with a 0.3- percent increase in the prior month. In August, price increases received by the industries for petroleum and coal products, furniture and related products, chemicals, plastics and rubber products, and primary metals outweighed falling prices received by manufacturers of food products, transportation equipment, and computer and electronic products. In August, the Producer Price Index for the Net Output of Total Manufacturing Industries was 143.7 (December 1984=100), 4.9 percent above its year-ago level.

Services. Among services industries in August, prices turned down for general medical and surgical hospitals, hotels (excluding casino hotels) and motels, software publishers, and scheduled freight air transportation. The rate of increase in the indexes for direct life insurance carriers, passenger car rental, and nonresidential property managers slowed from July to August. Alternatively, the industry indexes for scheduled passenger air transportation, investment banking and securities dealing, and wired telecommunications carriers turned up in August, after falling in July.